(The minutes from the 17-18 June FOMC meeting post on Fed.gov at 2 p.m. ET. Traders treat the 12-page PDF as a “live” data drop because it often reveals nuance that never surfaced in the policy statement or Chair Powell’s press briefing.) federalreserve.gov
Why a 2 p.m. release rattles markets
- Context reset. The document captures the policy conversation before the latest surprises—June’s stronger-than-expected payrolls, the ADP miss, and this week’s fresh tariff headlines.
- Front-end sensitivity. A single dovish sentence can knock 8-10 basis points off the 2-year yield or flatten the Fed-funds futures curve in seconds.
Five focal points inside the minutes
| # | What to look for | Market stakes |
|---|---|---|
| 1. Tariff debate | Whether members quantified the inflation impulse from President Trump’s 10-35 % “Liberation Day” levies. | A “temporary and modest” phrasing signals tolerance for an earlier cut; “persistent upside risk” would argue patience. reuters.com |
| 2. Balance-sheet runoff | QT has already slowed to $5 bn/month in Treasuries. Do minutes hint at a pause later this year? | A runoff pause lifts reserve balances, which can nudge long bonds higher even if policy rates fall. cmegroup.com |
| 3. Core-services stickiness | Shelter and other services are cooling only slowly—CPI 2.4 % y/y vs. core PCE 2.7 %. | If the committee downplays stickiness, September-cut odds rise; a hard-line stance favours November/December. bls.govreuters.com |
| 4. Labour-market health | Members had JOLTS and cooling job-openings, but not June’s 147 k payroll beat. | Any language calling risks “balanced” would let the Fed react quickly to a weak July jobs print. reuters.com |
| 5. Cut-timing signals | Word choice—“many”, “several”, or “most”—around the need to wait for more data. | Tells traders whether the centre of gravity is September or December. |
Street view
Morgan Stanley reiterated on 5 Feb that it now expects just one 25 bp cut this year—likely in December—citing tariff-driven inflation uncertainty. reuters.com
Where markets sit going in
| Metric | Latest | Take-away |
|---|---|---|
| 2-yr Treasury | 3.78 % (July 1 close) fred.stlouisfed.org | Down ~25 bp since mid-May as cut bets firm up. |
| 10-yr Treasury | 4.26 % (July 1 close) fred.stlouisfed.org | Curve still inverted. |
| 2s/10s spread | -48 bp | Steepening from April’s –70 bp low. |
| Sep 30-day Fed-funds futures | Implied 3.83 % policy rate | 76 % chance of a 25 bp September cut; July odds just 19 %. reuters.com |
Yield-curve lens
Traders judge a dovish set of minutes could push the 2s/10s spread toward –30 bp by week-end; a hawkish surprise could slam it back through –60 bp.
Risk-scenario matrix
| Minutes tone | Telltale phrase | 2-yr yield* | USD Index (DXY) | S&P 500 futures |
|---|---|---|---|---|
| Dovish | “Many judged a cut could soon be appropriate” | ↓ 7-10 bp | –0.4 % | +0.6 % |
| Neutral | “Most preferred to wait for incoming data” | ± 3 bp | flat | ± 0.2 % |
| Hawkish | “Further progress on inflation is necessary” | ↑ 5-8 bp | +0.3 % | –0.5 % |
*Reaction measured over the first 10 minutes after 14:00 ET.
Trader checklist – T-15 minutes
- Audio alert on Fed.gov (the PDF sometimes posts seconds before headlines).
- Quote-stale protection: widen SOFR option spreads.
- Swap spreads: the 30-yr moves first on any QT hint.
- FX algos: bracket EUR / USD and USD / JPY with 10-pip guard rails.
- Equity quants: refresh sector betas—regional banks and home-builders track the 2-yr in minute bars.
Chart deck
- Fed-funds futures curve—before vs. after minutes (see top carousel).
- 2s10s inversion tracker (second carousel image).
- CPI-PCE gap vs. Fed dots (available on request – methodology in notes).
Putting it together
The minutes drop at a moment when:
- Headline inflation is drifting toward 2 %, but core services remain sticky;
- Payrolls just surprised on the upside, yet ADP flagged emerging white-collar softness;
- Tariff policy is the wildcard—capable of lifting prices or denting growth;
- QT is near its “ample-reserves” threshold; and
- Futures already price a 75-plus % chance of a September cut.
If the text shows only modest concern about sticky services but elevated worry about tariffs and employment, expect front-end yields to extend lower, the curve to steepen, and the dollar to stay soft. A surprisingly hawkish read would likely undo the past week’s rally in front-end Treasuries and hand the greenback a short-covering bounce.
By 2:10 p.m. we’ll know whether traders were right to lean dovish—or whether Morgan Stanley’s “one-and-done in December” view gets fresh support. Either way, today’s minutes are the last major Federal Reserve communication before Friday’s non-farm-payrolls and the 31 July FOMC. Position accordingly, keep stops tight, and remember: the market moves fastest when everyone reads the same lines at once.